Abstract

The Brazilian integration strategy has been focused on agreements based upon North-South and South-South negotiations. However, such negotiations based upon tariffs and non-tariff barriers face serious troubles to be done. This paper is aimed at appraising options of economic integration policies based upon the reduction of transport costs. To do this, a spatial applied general equilibrium model was elaborated for analyzing economic integration policies in the country. This model incorporates explicitly transport cost as a trade barrier. The model is specified for five Brazilian macro-regions and five external regions (Nafta, Asia, European Union, South-American Community and rest of the World), with three production factors (unskilled labor, human capital and other factors). Several economic integration options were simulated in order to analyze what are the best ones for the country, appraised in terms of economic efficiency and regional equity. The findings show the option of the internal economic integration might be more viable than the external one in terms of social welfare gains and promotion of regional equity.

Item Type:

MPRA Paper

Original Title:

Is the truth out there? Avaliando as opções de integração econômica para o Brasil

English Title:

Is the truth out there? Evaluating the economic integration options for Brazil